1. Setting the Performance Standards:

The first step in the performance appraisal process is the setting of standards of performance expected from the employees. The standards set should be the line with the objectives and the mission of the organisation.

Further the standard set must be realistic and attainable. If unrealistic and unattainable standards are set, it will demotivate and demoralise the employee. Hence care should be taken while setting the standards.

2. Communicating the Performance Standard to the Employees:

It is not enough if just the standards are fixed. The expected level of performance should be communicated to the employees so that they are all well aware of what is expected of them.

3. Measuring the Actual Performance:

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This is a crucial step in the performance appraisal process. Here the actual performances are measured. There are various methods of measuring the performance.

4. Comparing the Actual With the Standard Performance:

Once the standard levels of performance are set and the actual performances are measured, the next step will be the comparison of the actual with the standard performance. This comparison will enable the determination of the gap between the actual and the expected performance; such gaps can be bridged through training and development.

5. Providing Feedback:

The performance appraisal process does not end with mere evaluation of the performance. It is essential to provide feedback to the employees on their performance. This will help the employees to identify the weak areas and initiate actions to overcome them. Such feedback motivates them to perform better in future by avoiding the repetition of the same mistakes.

6. Initiating Corrective Actions:

When a gap is found between the actual and the expected level of performance, corrective actions should be undertaken. By analyzing the reason for a gap, proper action should be taken so that the gap is bridged. When the actual and the standard performance match there is no need for any corrective action.